mortgage relief plan

#21 12-10-2007, 01:31 PM

Sgt.Sausage wrote:

- quote -

> Which looks better? A million folks losing their homes
> in a single year? OR Two hundred thousand (assuming an
> even distribution) a year for five years?

If it were spread out like that, I'd be less concerned, the current
articles (mostly read on NYT) suggest 'saving' about 360K people, for at
least those 5 years, but 1.4 million that will likely still foreclose.

I looked through this thread, and didn't see this link here;
http://www.responsiblelending.org/pd...eport-2-17.pdf

It offers a huge amount of data, and is worth some time for those
following this topic.
JOE

#20 12-10-2007, 09:16 AM

"joetaxpayer" <joetaxpayer[at]nospam.com> wrote in message
news

ZydnbcMI87JdsTanZ2dnUVZ_qainZ2d[at]comcast.com...

- quote -

> ... In the end, doesn't this 5 year delay just take part of today's
> problem and push it out to 2013?

My theory is that they know this. The thing they're after
is a more even distribution of the foreclosures over time.

I don't know the numbers, but say for the sake of argument
there's a million folks who are known to be going over the edge
next year. This program will keep some of 'em strung along.
Some have no hope, even with it they'll default anyway. Some
will be able to hang on for a year or two. Some will
be able to hang on for the entire five years but eventually
2013 gets here and the fat lady sings.

Which looks better? A million folks losing their homes
in a single year? OR Two hundred thousand (assuming an
even distribution) a year for five years?

I think they're just doing it to keep the year-over-year
numbers low ("Look! See -- we reduced the number of folks
thrown out of their homes last year! Aren't we good little
politicians!") ... but in the end, the same (or near the
same) number of folks have lost their homes to a foreclosure.
Typical DC -- a lot of hand waving, a photo op or two with
someone recently "saved" by the program, leverage it all
for more votes and in the end ... nothing really gets done
at all.

Just my opinion. No facts to support it.

#19 12-08-2007, 08:33 PM

Elle wrote:

- quote -

> I am supposing they made this announcement
> because industry and our political leaders (as always so
> often in bed together, and not necessarily always for bad)
> felt some kind of blanket announcement from the head of the
> country et al. would help boost consumer confidence in
> banking, credit, etc.

I agree. And it also amounts to some government pressure to get private
industry to fix its own problems (as the OP mentioned). This is
something like the bail-out of LTCM that was orchestrated, but not
funded, by the feds.

-Will

william dot trice at ngc dot com

#18 12-08-2007, 08:33 PM

Douglas Johnson wrote:

- quote -

> It is not clear to me who, if anybody, in all that mess has the authority to
> modify loan terms.

This was my thought, too. However, a bit on CNBC yesterday said that
the servicing companies can take action to "maximize the profit of the
mortgage pools" they service (the quotes do not imply an exact quotation
- sorry). The commentators were speculating that this meant that the
ball was in the service companies' court to decide if foreclosure was
less desirable than reducing or freezing interest rates.

-Will

william dot trice at ngc dot com

#17 12-08-2007, 08:33 PM

Bucky wrote:
- quote -

> For example, it is now more advisable to get an ARM that you
> cannot afford after the rate adjusts rather than get one that you can
> afford.

Only if everyone else does that, too. The coverage that this whole mess
is getting may just prevent a recurrence, at least for the next few years...

-Will

william dot trice at ngc dot com

#16 12-08-2007, 05:38 PM

Elle wrote:

- quote -

> "joetaxpayer" <joetaxpayer[at]nospam.com> wrote
> > If less than 20% of subprime borrowers can qualify, I
> > don't think that will slow the crisis too much. I agree
> > that helping 360,000 people is likely 'good', but it won't
> > solve the problem, and it does allow for reckless
> > behavior.
> I don't know... IIRC speculators will not be bailed out;
> only those who live in the homes they bought will.

Understood. But the numbers from the article still leave the 1.4 million
who will go to foreclosure. Speculator or not, the CMOs created from
those loans will have an impact on the market as will the depressed home
prices.

Elizabeth was right that the introduction to this topic was a political
line, but this topic impacts us all. The rest of the market is likely to
react and overreact both on the upside with this seemingly positive news
and to the downside when the remaining problems are still tallied.

I hope you are right regarding the 5 year improvement to one's income
and cash flow. I posted back in August, "Did anyone believe that the 1
year t-bill would actually stay at 1% forever? Borrow $250,000 interest
only at 3% and you pay $625 per month. When the rate goes up to 6% (and
fully amortizes) the payment jumps to $1500." I suspect these are the
numbers for many, an increase of more than 100%. Will 5 years' pay
raises and 5 years' planning save more than half these people? I hope so.

JOE

#15 12-08-2007, 04:09 PM

"Bucky" <uw_badgers[at]email.com> wrote
- quote -

> On Dec 7, 3:57 pm, "Elle"
> <honda.lion...[at]nospam.earthlink.net> wrote:
> > There is no government bail-out with this "plan." Lenders
> > are free to charge less interest on mortgages than that
> > which was originally contracted. Or the lenders can stick
> > with their original contract with the borrowers.
> Why couldn't lenders do that before?

Sure they could. I am supposing they made this announcement
because industry and our political leaders (as always so
often in bed together, and not necessarily always for bad)
felt some kind of blanket announcement from the head of the
country et al. would help boost consumer confidence in
banking, credit, etc. I really think this was about giving
people hope on a mass scale. That's not a bad thing for the
economy yada. So many in stocks do unwisely buy into mass
hysteria and sell at losses.

#14 12-08-2007, 03:53 PM

"joetaxpayer" <joetaxpayer[at]nospam.com> wrote
- quote -

> If less than 20% of subprime borrowers can qualify, I
> don't think that will slow the crisis too much. I agree
> that helping 360,000 people is likely 'good', but it won't
> solve the problem, and it does allow for reckless
> behavior.

I don't know... IIRC speculators will not be bailed out;
only those who live in the homes they bought will.

Lots of folks do seem to come here asking about real estate
investing. This bubble should be instructive.

- quote -

> In the end, doesn't this 5 year delay just take part of
> today's problem and push it out to 2013?

Again, I don't know for sure, but I do figure a lot of folks
in trouble will see pay raises over the next five years, so
they will have a better chance of avoiding foreclosure then.
So to anyone coming here saying they were almost foreclosed
and your bank is giving you five years: You have a reprieve.
Now save save save and work hard.

#13 12-08-2007, 01:39 PM

- quote -

> The plan, and how it is constructed, may indeed be part of financial
> planning. The OP said "I am upset about the mortgage relief plan". His
> political opinion on this subject , and that of any other of us, is
> decidedly off topic and has no place here, as is, for instance, a political
> opinion on social security. That discussion, too, has been nixed several
> times by our moderators.
> Elizabeth Richardson

Oh, Elizabeth, lighten up. If you don't want to read about this
subject, skip it. I, for one, find this mortgage relief plan
discussion interesting and financially informative. Several friends
have mentioned it to me recently & I was able to discuss it
intelligently due to reading this website. Incidentally, I enjoy your
posts as well--you are sharp and informed.
SandyBeth

======================================= MODERATOR'S COMMENT:
Discussions of the mortgage relief plan, to the extent it impacts financial planning, is appropriate here. Our political views (on the plan or any other topic) are not.

#12 12-08-2007, 11:43 AM

On 2007-12-08, Bucky <uw_badgers[at]email.com> wrote:
- quote -

> Why couldn't lenders do that before?

Why do you think they couldn't?

#11 12-08-2007, 11:43 AM

"Douglas Johnson" <post[at]classtech.com> wrote in message
news:cp0kl35lfq3qfdsa6l7m43ki3g79sv5sg8[at]4ax.com...

- quote -

> It is not clear to me who, if anybody, in all that mess has the authority
> to
> modify loan terms.

And some recent case law shows that it's not clear, to the
courts, exactaly who, if anybody in all that mess has the
authority to actually *foreclose*:

http://www.ohio.com/news/top_stories/11421351.html

#10 12-08-2007, 04:00 AM

"Bucky" <uw_badgers[at]email.com> wrote in message
news:5928c181-f05a-458e-a5f3-4b9af751ca3a[at]d21g2000prf.googlegroups.com...
- quote -

> I agree this is somewhat on topic. Maybe not venting frustration, but
> discussion of mortgage relief package can be relevant to financial
> planning.

The plan, and how it is constructed, may indeed be part of financial
planning. The OP said "I am upset about the mortgage relief plan". His
political opinion on this subject , and that of any other of us, is
decidedly off topic and has no place here, as is, for instance, a political
opinion on social security. That discussion, too, has been nixed several
times by our moderators.

Elizabeth Richardson

#9 12-08-2007, 01:47 AM

Bucky <uw_badgers[at]email.com> wrote:

- quote -

> On Dec 7, 3:57 pm, "Elle" <honda.lion...[at]nospam.earthlink.net> wrote:
> > There is no government bail-out with this "plan." Lenders
> > are free to charge less interest on mortgages than that
> > which was originally contracted. Or the lenders can stick
> > with their original contract with the borrowers.
> Why couldn't lenders do that before?

Because the ultimate lender is some pension fund in South America, who bought a
CDO from an investment bank that bought the mortgage from the originating broker
and paid still another company to service the loan.

It is not clear to me who, if anybody, in all that mess has the authority to
modify loan terms.

-- Doug

#8 12-08-2007, 12:08 AM

On Dec 7, 3:57 pm, "Elle" <honda.lion...[at]nospam.earthlink.net> wrote:
- quote -

> There is no government bail-out with this "plan." Lenders
> are free to charge less interest on mortgages than that
> which was originally contracted. Or the lenders can stick
> with their original contract with the borrowers.

Why couldn't lenders do that before?

#7 12-08-2007, 12:08 AM

- quote -

> Elizabeth Richardson wrote:
> > Too bad. What does your opinion on Bush's plan have to with financial
> > planning?

On Dec 7, 1:12 pm, zxcvbob <zxcv...[at]charter.net> wrote:
- quote -

> As with all bail-out plans it subsidizes people who failed to do their
> financial planning, thus encouraging risky behavior in the future.

I agree this is somewhat on topic. Maybe not venting frustration, but
discussion of mortgage relief package can be relevant to financial
planning. For example, it is now more advisable to get an ARM that you
cannot afford after the rate adjusts rather than get one that you can
afford.

#6 12-07-2007, 11:58 PM

Elle wrote:

- quote -

> "zxcvbob" <zxcvbob[at]charter.net> wrote
> > As with all bail-out plans it subsidizes people who failed
> > to do their financial planning, thus encouraging risky
> > behavior in the future.
> There is no government bail-out with this "plan." Lenders
> are free to charge less interest on mortgages than that
> which was originally contracted. Or the lenders can stick
> with their original contract with the borrowers.

Indeed, the NYT story says it's not a Government bailout, it's industry
lead.
One tiny quote from it:
"The plan was the target of criticism from consumer advocates who said
its scope was too narrow, and from investment firms, who said it went
too far. Others warned that the plan, by letting some stretched
homeowners off the hook, could encourage more reckless borrowing in the
future."
Well, that's fascinating. If less than 20% of subprime borrowers can
qualify, I don't think that will slow the crisis too much. I agree that
helping 360,000 people is likely 'good', but it won't solve the problem,
and it does allow for reckless behavior. How this props up the value of
the CMDs those mortgages comprise remains to be seen. In the end,
doesn't this 5 year delay just take part of today's problem and push it
out to 2013? At this point, I don't have any answers, just more
questions on how this will all get played out.

Someone posted that the cost of foreclosure and subsequent resale is so
high, not to mention carrying costs along the way, that the subsidized
lower rate is less expensive to the banks (and CMD holders) than to
foreclose. Sounds good to me.

JOE

#5 12-07-2007, 10:57 PM

"zxcvbob" <zxcvbob[at]charter.net> wrote
- quote -

> As with all bail-out plans it subsidizes people who failed
> to do their financial planning, thus encouraging risky
> behavior in the future.

There is no government bail-out with this "plan." Lenders
are free to charge less interest on mortgages than that
which was originally contracted. Or the lenders can stick
with their original contract with the borrowers.

Since it's entirely voluntary, it's a ploy to buoy consumer
optimism.

#4 12-07-2007, 08:12 PM

Elizabeth Richardson wrote:
- quote -

> <beliavsky[at]aol.com> wrote in message
> news:0ac6aa85-2ce2-4b90-82c3-3301dffe221d[at]i29g2000prf.googlegroups.com...
> > I am upset about the mortgage relief plan proposed by President Bush
> > (trying to pre-empt the Democrats).
> Too bad. What does your opinion on Bush's plan have to with financial
> planning?
> Elizabeth Richardson

As with all bail-out plans it subsidizes people who failed to do their
financial planning, thus encouraging risky behavior in the future.

Since it got by the moderator without comment, it obviously was
sufficiently on-topic. I get a little upset by off-topic post in
unmoderated groups. But in moderated groups, it's not my job to police
other people's posts. It's really quite freeing once you get used to
it. If you are one of the moderators, them my apologies.

Best regards,
Bob

#3 12-07-2007, 05:59 PM

On Dec 7, 11:25 am, beliav...[at]aol.com wrote:
- quote -

> I am upset about themortgagerelief plan proposed by President Bush
> (trying to pre-empt the Democrats). Here is an excerpt from the NYT
> http://www.nytimes.com/2007/12/07/bu...7mortgage.html
> News Analysis
> OnMortgageRelief, Who Gains the Most?
> By EDMUND L. ANDREWS
> 'The number of people who actually obtain help would be smaller,
> because each borrower would face tests aimed at weeding out those
> considered too hopelessly in debt and those who make too much money to
> justify relief.
> In one curious twist, the plan could eliminate many who have good
> credit scores or managed to improve their credit scores, because the
> good ratings would be a sign they do not need help.
> "Talk about moral hazard," remarked Representative Barney Frank,
> Democrat of Massachusetts and chairman of the House Financial Services
> Committee. "We've all told people, don't go any more deeply into debt.
> Now we're saying that people who go more deeply into debt will have an
> advantage over people who don't go more deeply into debt."'
> In general, I don't the government should be pressuring lenders to
> change the terms of mortgages. If the homebuyer can't pay themortgage, he needs to vacate the house and rent. Lots of us do. If the
> lender can cut losses by changing the terms of themortgage, there is
> no need for government pressure.
> If changes are going to be made on a wide scale under government
> pressure, I think hard cut-offs based on credit scores that punish
> people for maintaining good credit send a horrible message -- paying
> your bills on time and not over-extending yourself will *cost* you
> money.
> If you agree with me, please consider contacting your congressman or
> other elected officials.

> "Talk about moral hazard," remarked Representative Barney Frank,
> Democrat of Massachusetts and chairman of the House Financial Services
> Committee. "We've all told people, don't go any more deeply into debt.
> Now we're saying that people who go more deeply into debt will have an
> advantage over people who don't go more deeply into debt."'

Yup.

======================================= MODERATOR'S COMMENT:
Please trim the post to which you respond. Also see the weekly post, "Posting to misc.invest.financial-plan". Thank you for participating.

#2 12-07-2007, 05:58 PM

On Dec 7, 12:28 pm, "Elle" <honda.lion...[at]nospam.earthlink.net> wrote:
- quote -

> <beliav...[at]aol.com> wrote> http://www.nytimes.com/2007/12/07/bu...7mortgage.html
> snip for brevity per moderation guidelines
> > In general, I don't the government should be pressuring
> > lenders to
> > change the terms of mortgages. If the homebuyer can't pay
> > the
> > mortgage, he needs to vacate the house and rent. Lots of
> > us do. If the
> > lender can cut losses by changing the terms of the
> > mortgage, there is
> > no need for government pressure.
> I saw this article first thing this morning as well. I felt
> the article was clear that themortgageindustry had
> initiated this. It is doing so largely to cut its losses
> and/or simply maintain flow into their corporations.
> Apparently, lenders do not have to freeze or do anything
> with the contracts they have with borrowers. What they do
> in this matter is entirely voluntarily, from my reading.
> I think the Bush announcement was an effort to shore up the
> stock market as much as anything else. Psychology. :-)
> Now if NY Attorney General Andrew Cuomo would just announce
> he is not going after WaMu after all... But in my opinion
> WaMu needs investigating for its shady appraisal business;
> Goldman Sachs for its simultaneous hedging and promotion ofmortgagebacked securities. Etc.
> > If changes are going to be made on a wide scale under
> > government
> > pressure, I think hard cut-offs based on credit scores
> > that punish
> > people for maintaining good credit send a horrible
> > message -- paying
> > your bills on time and not over-extending yourself will
> > *cost* you
> > money.
> > If you agree with me, please consider contacting your
> > congressman or
> > other elected officials.
> If queried, the only thing I might say to my members of
> Congress is that I feel government regulation may be
> appropriate if lenders effectively defrauded low income and
> low net worth borrowers, preying on their lack of education.

> If queried, the only thing I might say to my members of
> Congress is that I feel government regulation may be
> appropriate if lenders effectively defrauded low income and
> > low net worth borrowers, preying on their lack of education

Strawdog.

======================================= MODERATOR'S COMMENT:
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